22 October 2011, Financial Times
As high-end properties are increasingly sold off-market by vendors who guard their privacy…
… discreet professionals specialise in finding hidden gems – and keeping the peace
By Tanya Powley
It is a well rehearsed fact that, since the downturn, the rich are getting richer. According to a recent report by Merrill Lynch and Capgemini, the number of millionaires across the globe grew by 8.3 per cent to 10.9m in 2010. The total wealth of these individuals rose to $42,700bn, up from $40,700bn in 2007. Which makes high-end, prime-location property more attractive than ever as a secure investment.
However, buying prime property is fraught with problems from “silent listings” – property which is never advertised – to vendors reluctant to sell to anyone who appears wealthier than themselves.
Enter the high-end buying agent: property professionals who have the well-honed skills to secure a home despite the secrecy and jealousy.
“I often say a good alternative career for what we do would be a diplomat. We have to massage egos left, right and centre,” explains Jeremy Davidson, a property consultant who specialises in properties that cost £10m or more in the most exclusive neighbourhoods in London.
He notes that it can be common for vendors at the upper echelons of the housing market to become jealous if they think the person buying the house is richer than them. Tensions around these issues can scupper a sale.
“It wouldn’t happen if they were selling their business but, because it’s their home, people often lose their sense of rationale,” says Davidson.
This is where a buying agent’s negotiating skills come into play, in order to smooth the path of a sale and keep both parties happy. “It can sometimes be a game of male egos and it’s our job to make sure everything stays on an even keel,” he explains.
Increasingly the main appeal of buying agents is their ability to access silent listings. In other words, the best agents are those with inside knowledge, who know where to find properties that are never going to be seen in an estate agent’s window or on the pages of a glossy magazine.
The reasons behind such discretion are usually to do with confidentiality, privacy or security – as well as a belief held by many wealthy owners that it is vulgar to advertise their home.
Buying agents can be found in most of the world’s prime property markets. However, they are more familiar in some regions than in others. Sales of multimillion dollar homes in Australia, for instance, are nearly always silent listings, says Tracey Finnegan of Premium Property Finders, a Sydney-based buying agent who has worked with clients from all over the world.
“People who own multimillion dollar properties often don’t want to list their property on the market as they don’t want just anyone coming around their house or looking at their photos online,” says Finnegan.
“Also, some agents want to see the colour of the money and it is my job to convince the agent or vendor that they are serious buyers and have finance in place,” she says. This often involves the buying agent providing the seller with a net asset value statement from the prospective buyer in order to have a look around the house.
Michelle O’Brien, 40, is chief executive of her own mining company and used Finnegan to find a home in Point Piper, an exclusive suburb overlooking Sydney harbour. Her property was a silent listing and Finnegan negotiated the price down from $9m to $7.5m.
“We would never have found this property without Tracey as it was a silent listing,” says O’Brien. “Tracey does all the hard work and negotiation for us,” she says.
Private deals are becoming even more popular in London as well-known millionaires seek to avoid the spotlight of an open market transaction. The Buying Solution, one of the UK’s largest buying agencies, has purchased around £150m worth of property that was not publicly for sale since the start of the year – representing almost half of the firm’s purchases so far in 2011.
Camilla Dell, managing director of Black Brick Property Solutions, says many rich sellers do not wish the general public to know about a sale, especially if they are well-known, because it may attract window shoppers.
By selling off-market, a vendor can ensure that only known buyers, who have been vetted beforehand, are allowed access to the property.
This can sometimes involve not showing the property to buyers of a certain nationality in order to make sure the seller is not recognised. Dell is currently working with a house that she cannot show to potential buyers from the same country as her client.
However, buying an off-market property does not always mean individuals are getting the best deal. Agents admit that buyers have become “obsessed” with only viewing off-market properties, believing that they are always better than others.
Off-market properties can end up more expensive if a vendor is unwilling to move from a set price that has not been tested on the open market. Many vendors also keep their home off the market so that it seems more exclusive and to hide how long it has been up for sale. It is the buying agent’s job to secure the best price for their client.
“I’m absolutely ruthless about only short listing the best quality properties at their right price and I will probably only include 10 per cent of all the properties I see,” says Barbara Wood of The Property Finders, a buying agent that specialises in upmarket homes in Spain, Italy and the UK.
The services of a property consultant can be particularly helpful when buying overseas. Many buyers lack the understanding of local law, traditions and language skills needed to negotiate overseas property.
Stuart Baldock of Property Vision France has worked with a wide range of nationalities including buyers from Jamaica, UAE, Russia, India and the US. He says international buyers need advice about fashionable second home destinations such as the Côte d’Azur: “The prices typically advertised are very optimistic so you really need somebody who knows the market.”
Paul Belcher of Ultissimo, a buying agent for Lake Como, says the Italian market can be a complex one for non-residents. “To conclude a transaction … probably takes more time than most clients actually have,” he says.
This was the case for Stuart Kingham, a Hong Kong-based computer programmer, who bought a second home in Lake Como through Ultissimo. “Before we found Ultissimo we were at a little bit of a dead end … We had spent years trawling the internet and going through estate agencies,” he says. In the end, he purchased a renovated silk factory without ever visiting the property. “Ultissimo helped us with arranging the mortgage, lawyers, bank accounts, everything,” says Kingham.
Buying agents stress that it’s not just about finding a property for a client. For those who want the full service, agents will be able to provide advice on installing the latest green technology or on an interior design service.
This all comes at a cost. Buying agents across the globe will typically charge a one-off retainer flat fee and then a success fee of between 2 and 3 per cent of the property price.
It can also take a long time to find a client’s dream home. Baldock says he recently bought a multimillion pound home in France for a client within three months, while it took three years to find another client’s perfect house.
Similarly, Byron Rose of Rose & Jones, an Australian buying agency, was engaged to secure the waterfront property of a client’s neighbour. “The deal took over 12 months to complete but the client now has over 3,000 sq m of harbour front property,” says Rose.